Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed



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solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1
Solution Exhibit 6.22
*Calculation of kilograms of Gamma Let X = Good output
44 000 – XXX


Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
6.23

Joint-cost allocation, process further or sell by-products.
(75 min)

1
[AQ7]


Altox Lorex Hycol Total
Expected final sales value of production a
€595,000
€2,500,000
€660,000
€3,755,000 Deduct expected separable costs to complete and sell

1 1,400,000

1 1,400,000 Estimated net realisable value at split-off point
€595,000
€1,100,000
€660,000
€2,355,000 Weighting b 0.253 0.467 0.280 1.000 Joint costs allocated cab €2,355,000); (€660,000 ÷ €2,355,000) c (€1,800,000
×
0.253); (€1,800,000
×
0.467); (€1,800,000
×
0.280)
2
Further Processing Altox
Incremental revenue
(€5.50
× 150,000) − (€3.50 × 170,000)
€825,000
− €595,000

€230,000 Incremental processing cost

250,000 Incremental operating income
€(20,000)

Further Processing Lorex
Incremental revenue
(€5.00
× 500,000) − (€2.25 × 500,000)
€2,500,000 −
€1,125,000
€1,375,000 Incremental processing cost
1,400,000 Incremental operating income

€(25,000
)


Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
Further Processing Hycol
Incremental revenue
[€1.80 × (330,000 × 1.25)] − (€2 × 330,000)
€742,500

€660,000
€82,500 Incremental processing cost

75,000 Incremental operating income

€7,500
Current Policy
Sell
Altox at split-off

€595,000 Process
Lorex further
1,100,000 Sell Hycol at split-off


660,000

2,355,000 Joint costs
1,800,000 Operating income

€555,000

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